Liberals' sense of betrayal shouldn't surprise

I opposed the original Bush tax cuts. But I support a temporary extension now. Let's think about the circumstances. We're in a horrible economic climate. The entire business community thinks the government is out to destroy them. Do we think raising taxes on small business people is going to improve their willingness to invest and take risks?

In other words, the economy did fine in the Clinton years with a 39 percent rate. Eventually, we should return to that. But this is not the moment to take another sledgehammer to market psychology.

I'm actually a little depressed by Democrats' inability to think dynamically about this. Yes, the rich have made a ton of money over the past decades. They could probably afford to pay more. But some percentage of them really, really cares about tax rates and those people will change their behavior if they think the U.S. hates business and if they think they won't get to keep their profits.

I don't know why Brooks would be depressed only now. For 30 years the Democrats have refused to think "dynamically" about the connection between tax rates and economic behavior (or, for that matter, between regulation and business activity). It is precisely because liberal Democrats (who are particularly well represented in Congress) have rejected dynamic tax policy for so long that they are now experiencing a spasm of frustration and anger.

Get it? By agreeing to another round of massive tax cuts for the wealthy, the president confirms the Republican story. Cutting taxes on the rich while freezing discretionary spending (which he's also agreed to do) affirms that the underlying problem is big government, and the solution is to shrink government and expect the extra wealth at the top to trickle down to everyone else.

Obama's new tax compromise is not only bad economics; it's also disastrous from the standpoint of educating the public about what has happened and what needs to happen in the future. It reinforces the Republican story and makes mincemeat out of the truthful one Democrats should be telling.

I don't agree with Reich on the merits, but he sure does have the narrative correct. It's as if Ronald Reagan entered office and announced unilateral disarmament -- his most loyal supporters would have considered it not only dangerous policy but a personal betrayal. In other words, Brooks should hardly be surprised that Robert Reich Democrats are enraged as they watch their devoutly held economic precepts go down the drain -- under a liberal president, no less.

One final thought: at the American Enterprise Institute last week, Brooks opined that Republicans were incapable of compromise. He argued that if a deficit deal with 99 percent spending cuts and 1 percent tax hikes were proposed, they'd reject it. Well, Senate Minority Leader Mitch McConnell just brokered a deal that includes a year extension of unemployment benefits. Frankly, the tax agreement doesn't give the Republicans 99 percent of what they wanted (maybe 90 percent) and yet they willingly made the deal. Perhaps, Brooks has underestimated the degree to which canny deal-makers are now in charge of the Republican House and Senate caucuses.

The Bush tax cuts were enacted after the 1990s equity bubble burst. It made the economy a lot better than it otherwise would have been. (Same argument that Obama uses in response to the "The stimulus plan didn't work" argument)

The only reason why we weren't experiencing the current economic pain 10 years ago is because we were inflating a real estate bubble. Once that burst, the game was up.

DC imposed a 5 cent tax on disposable bags this year and their usage declined by 50%. Maryland increased their cigarette tax by $1 in 2008 and sales declined by 25%. John Kerry parked his boat in Rhode Island instead of Massachusetts -- the state he represents -- in order to avoid taxes. Hell, Keith Richards said that taxes are the reason the Rolling Stones rehearses in Canada instead of the US.

But we are really supposed to believe that increased taxes on personal and business income doesn't affect economic output? If Democrats believe this then they are utterly clueless.

It's really simple people: if you tax something you get less of it. There is nothing for which this doesn't hold true.

There is another part of the big government narrative that hide bound liberals like Reich simply don't understand. The American people have witnessed repeated massive failures of the regulatory/bureaucratic regime.

The left made a huge deal out of the Katrina disaster but all that griping simply pointed out the failure of government at all levels. The Mayor got it wrong. The govenor got it wrong. The feds got it wrong.

The BP oil spill was yet another example of the abject failure of our government. Does anyone know what the annual budget of MMS is? I found a report from 2006, at that time the NET cost of that service was 2.1 billion. OK, for what? So overpaid underperforming employees could view porn on the federal computer systems while accidents are waiting to happen?

Obama's idiotic moratorium should send a clear message. Regulation is such an abject failure that the only way to assure that no further accidents occur is the insure that no further activity occurs. Great, just great.

And then there is the financial meltdown. How many alphabet soup agencies were responsible for monitoring the financial industry? The SEC alone, in 2009, asked for 913 million. Almost a to the B word. that year they projected a total labor pool of 3,473 employees. And again, they were watching porn on the internet when disaster struck. A disaster they were paid to either prevent or predict.

the liberals are at a loss to understand the taxpayer revolt they are witnessing. Instead of recognizing that hard working Americans will not long tolerate the wasting away of their money by others, they are whining about "greed" because we have the unmitigated nerve to wish to keep the money we earned.

Those of us who believe in a limited government need to harp on the repeated failures of our government as a way of illustrating the massive fraud that is the Democrat's tax and spend agenda

The comments above are showing confusion about cause and results. Is our current Fiscal/Monetary system the Cause of our nation's Economic problems? It's a complicated question? Our current system which began in 1971 is a International Floating Currency Fiat money system. From 1944-1971 we had an asset backed money system. We need to compare the two,and make a decision as a Democratic nation about how we handle our money.
Jennifer,if indded,you are a Free Market Capitalist, what argument would you oppose against having free choice about our money. If person A wanted paper money,awesome,but why can't person B have gold baced currency if he so chose,and person C wants wheat to back his money,why not,are we free or not? One answer to the question might be that no one would choose the paper money option,therfore,de facto,the system would become asset based.
Ask JSG,his opinion on this. He's a free market guy. Why don't we have a free market in the kind of currency we use?

Do I need to remind all you ignorant liberals of the horrors of deprivation and hunger in the 1950's when our most valuable citizens were taxed in excess of 90%? What you need today is for me not to pay any taxes at all. I will then spend money on myself and as I do a little bit will trickle down to your class.

What's up with this conceit that because the top rate was 39% during the CLinton years that it is a good thing? Does he believe that the 39% tax rate helped drive the economy? If not, I guess he means that it was good despite the top tax rate. The problems with this point of view is that it is making an assumption that all economic times can be like the 90s. Unfortunately, that decade (incredible GDP growth fueled by technological advances that revolutionized the work place as well as a huge boom due to the liberalization of global trade) will not be replicated any time soon if at all. Brooks' thinking is surprising in its lack of analysis.

I think the problem is that when people like Reich think of the "rich," they envision some hedge fund manager sitting in the back of his limousine, lighting a cigar with a $100 bill, while driving over poor people who are starving in the street. They never envision some ordinary person trying to grow a small businesss on a 5% profit margin. It never dawns on them that a 3% increase in the marginal tax rate is the difference between that 5% profit margin and a 2% profit margin. Which is to day, the difference between growth and failure.

By the way lefties, you can google the term "profit margin" if you like. You might find it interesting.

Larry3435 They never envision some ordinary person trying to grow a small businesss on a 5% profit margin.

Larry,tell me about the effect of Inflation on growing a business. BTW,if your business is only throwing off 5% profit(I'm assuming this is after tax net),maybe you better figure out how to increase that margin instead of spending your time whining to Jennifer. I started a Business in 1983,sold my share in 1994,and have been consulting/semi-retired ever since. Taxes are a side show,Inflation/Currency Stability is the main event.

Jen, there is such a disconnect between leftists and their confiscatory appetite and their carefully crafted weasel words (which are planted into the culture and grow like weeds in pop lexicon)...and fiscal reality.

Leftists need to feed the Audrey II government beast on the backs of those who pay the overwhelming amount of taxes in this land of ours.

It is NOT a "tax cut" for the "rich" to extend the current tax rates and not raise them from current percentages.

It is NOT a "tax break" for the "rich" to confiscate accumulated wealth, upon which taxes have been paid in full, from a man or woman who built a business and wants to leave it to their children and grandchildren. Taking an ADDITIONAL 55% of that money to gorge themselves on bloated "entitlements, pensions and junkets", is nothing more than organized theft.

Audrey II bellows out another "Feed Me", and the leftists tap another vein from which to soak the "rich".

Oh, they aren't coming for You and Me....today. It's only those "evil" rich, who have "earned enough" and they want to "redistribute" the "wealth" to those who have been "disadvantaged".

What a crock. It isn't helping anyone except government lackeys, ACORN/SEIU thugs and cottage industry con men who make a living pushing "wedge" issues at businesses and non-leftists, in order to keep the flames of manufactured rage alive.

Brooks and Frum are so terrified at being lumped in with the "enemies" of the faux intelligentsia, they bow and scrape and genuflect at the altar of false equivalency, moral, fiscal and intellectual.

It is high time that leftists get a dose of reality. The long con has been exposed. Those to the left of Obama want to go all in, cards face up on the table. Obama and the other stealth communitarians want to put the mask back on and hide the end game.

I say, call the question. And, stop immediately using the weasel words of the left, let's call things what they are.

Leftist economics/Righty Economics-irrelevant:
The only economics that counts is factual Economics. No one commenting here except for me discusses inflation. The reason for that is Inflation can't be blamed on the Leftists or the Rightys,it's a systemic problem that requires the citizens to get together to stop Inflation Now,but what fun is that,when we can call each other names?

The Clinton years were a bubble, followed by the worst stock market crash since 1929. (Much worse that the one at the end of the Bush years).

Clinton blew the 15 years of Fed austerity, by raising taxes to economy crushing levels, prompting Alan Greenspan to flood the markets with the cash that drove the bubble, later recycled into the housing bubble. Yes, our crises all go back to Clinton's disastrous economic mismanagement.

The Bush tax cuts saved our economy from the double whammy of the Clinton Crash of 2000 and 9/11. My hat goes out to Bush for those early policy moves (not his later ones), and I also applaud Obama for conceding to the Republicans.

I suspect the reason that nobody is responding to your comments about inflation is that you are not saying anything about how to control inflation. Everybody knows that inflation is a bad thing. IMO, the way to control inflation is to control government spending and to have a healthy, growing economy. Low tax rates (if you can consider the 50% plus in combined taxes that employers currently pay to be "low") help the economy. Even lower rates would be better yet, but good luck with that.

Pick any year in the last 50. Look at government revenues for that year, and compare them with government spending 10 years before that (adjusted for inflation and population growth). There is always a healthy surplus. Conclusion: Control spending for ten years, and you will have taken care of the deficit. That will take care of inflation.

Democrats loathed Bush with a quasi-religious fervor for his tax cuts, two wars, Gitmo and the Patriot Act. Now that Obama has adopted each as his own, they face terrible cognitive dissonance. Poor dears!

Democrats loathed Bush with a quasi-religious fervor for his tax cuts, two wars, Gitmo and the Patriot Act. Now that Obama has adopted each as his own, they face terrible cognitive dissonance. Poor dears!

Your figures don't change no matter who is charge. Republicans spend just as much as Dems do just on different items. All this talk about budget cutting will die soon enough once the new people are in office and have largesse to distribute themselves.

The crippling Inflation we have experienced started in 1971 when we went from Gold to paper. The only way to control inflation is to have an asset backed currency,and that is no guarantee. The constitution does not require a balanced budget,but we had little inflation from 1944-1971. What you are really saying is that people don't respond to remarks about inflation because they refuse to understand and have no intellectual curiosity about it. Our host Ms Rubin is silent as the sphinx about it. Because,it opens a can of worms for her political ideology.

A lot, but not "just as much." I'm hoping they got the message of the last election. Even if not, the difference between bad and worse is much sharper than the difference between good and better. I'm not making excuses, but you do what you can.

I am so sorry. I did not realize. Please convert all your dollars to Krugerands, and good luck with the whole gold bug thing. And PLEASE, PLEASE do not ever again claim that I posted one of your posts.

rcaruth,
I am so sorry. I did not realize. Please convert all your dollars to Krugerands, and good luck with the whole gold bug thing. And PLEASE, PLEASE do not ever again claim that I posted one of your posts.
Posted by: Larry3435

Larry
(1)Did not realize what?
(2) Gold is way too expensive right now to invest in.
(3)And Good Luck to you and our luckless nation with that whole Fiat Money thing
(4)And stop whining about a cut and paste error,it happens,nobody claimed anything about you. BTW,Your job is to listen and learn,maybe someday you'll earn the right to Post something instructive,

'Trickle Down': Gee, ya think? Hey Bob, it's a "law" and it's called "gravity". Wealth NEVER trickles up. Wealth is created by adding value to something. I don't see a whole lot of poor people adding much wealth to anything. The only thing that remains to be determined is who gets to trickle it down; those who earn it in the free market or the statists that steal it to give it to favored constituents. Oh, and spending money doesn't make you (or us) rich. Bob.